Does a contract need to be signed by both parties?
Contracts are agreements which specify terms and have the purpose of holding each party accountable. They generally need to be signed by the sender and the receiver to activate the terms of the agreement, show that they accept the terms of the contract and make it valid, although there are some forms of contracts that don’t necessarily need to be signed for a court to deem the contract valid.
This article will explain the reasons that contracts may or may not need to be signed, and will try to answer the question: does a contract need to be signed by both parties?
What exactly is a contract?
A contract is essentially an agreement for one or more parties to do (or not do) something in return for something of value. A contract can involve multiple parties or between companies and may involve anything from real estate to investments to gardening services. Government agencies or individuals can also enter into an agreement. If a party doesn’t follow the terms, they may be found in breach of contract.
For something to be classed as an agreement, an offer must be made and then accepted by the other party or parties, and without both the offer and acceptance, there is no agreement. However, on its own, an agreement doesn’t necessarily qualify as a contract.
There are many types of contracts, but at the most basic level a valid contract needs to:
- Contain an agreement of some kind in some part of the contract.
- Have consideration (some sort of price or value defined).
- Have an actual legal purpose.
- Follow the standard legal requirements set for the relevant classification of the contract.
Does a contract always need to be signed?
Yes, a contract does need to be signed to become a valid contract. There are occasional cases where oral contracts or unsigned contracts may still comply with contract law, but those are risky. By far the most sensible and advisable way to conduct business is to simply get a proper contract drawn up, recruit legal services to give you legal advice, and ensure that each party signs it before commencing work or releasing the payment.
What is the best way to get contracts signed by both parties?
There are two options for signing and ensuring that each party fulfills its legal obligation: physical handwritten signatures, and electronic signatures. The former was the only way of doing things until the last couple of decades and is still very common. It’s simple and effective but is gradually becoming replaced by electronic signatures in many businesses.
This is because it’s essentially an outdated way of signing. Documents must be printed, physically signed, scanned, then sent to the other party to repeat the exact same process. This is time-consuming and increases the possibility of human error interfering with important business.
Electronic signatures are a digital representation of a physical signature, with the exact same function of acknowledgment that the signer accepts the contract terms and still making it an enforceable contract. eSignatures are a useful invention in many ways, mainly because they’re faster and more efficient than traditional signatures.
There’s no need to print, scan or mail contracts unless you want to, copies can be made at the touch of a button, and they can be very quickly sent to any recipients via the internet.
How to use electronic signatures
There are many different ways today to eSign a document and still create a binding contract. Some word processing software, such as Microsoft Word, has built-in eSignature functionality to allow you to add a digital signature to documents. This is a popular way to sign, and is convenient in the sense that it’s all within the same software that most businesses are already using.
However, there are many drawbacks of using Word to sign documents, mostly stemming from the fact that the function is more of an afterthought than an original feature. It can be quite a complicated process for users to add electronic signatures using Word, which means it can be time-consuming and require training for staff to do it properly.
There’s also a functionality gap, as it is difficult to send completed contracts and track metrics about the ways recipients interact with them, among other things. This makes using Word an inconvenient and potentially expensive way of doing things, particularly for sales teams that send a high volume of contracts daily.
An alternative growing in popularity is the use of dedicated software, such as PandaDoc, DocuSign, and others. Many of these services have been built with the purpose of making documents as easy to sign as possible. Some even include other useful functions, like document creation from templates, simpler sending to a large number of recipients, document tracking, automatic notifications and more.
Sign your contracts more efficiently, with eSignatures
If you or your organization needs to create and send contracts, then they’ll need to be signed. The fastest and most convenient way to do this is to make sure each party signs electronically, for which you could use a wide range of different software services. With new technology and new dedicated providers now available, older programs like Word are outdated.
Specialized software, such as PandaDoc, SignNow, and DocuSign are great ways for you and your team to effortlessly add eSignatures to as many documents as you like, and with many, you’ll even get extra features to assist with document creation, sending, tracking and more.